Return-on-investment (ROI), on-time, and budget have always been critical deliverables. All three are excellent, and these used to be the only targets to aim for. Often, a project manager does not know that the project is on a path to failure because they are focused on delivering. Sometimes, even on time and budget isn't considered a successful project. But that is for another article.
For example, we monitor whether we improve or get worse when we get sick. Feedback to the doctor on his diagnosis and sometimes adjustments are required to be made along the way. Project managers must monitor a project's health similarly, adjusting if necessary.
What is Project Health?
In business management, project health refers to the status of a project's overall functionality and progress toward successful completion. Projects are undertaken to accomplish some objective of the organization. It is in the organization's best interest to understand the state of the project at any given point on the way to delivery.
Project health is what is happening in the project so we can compare it to what we thought would happen and take appropriate actions to put the project on track or inform the project's sponsor that it may cost more or be delivered late. This comparison will be required to make informed decisions, decisions based upon data and facts in as much as we can make happen.
Why does the project manager need to monitor the Project's Health?
Any one area of a project can sink that project. Typically, C-level management is only interested in cost and schedule. These two areas can undoubtedly sink a project, ruining our business case. For example, a project was determined to be a failure when the project owner hid $80K (10%) of the project budget without telling the project team, and it got spent.
Even though the project met or exceeded every project goal on the qualification run. So, the project manager needs to monitor all the project areas as all feed into Cost and Schedule. Below is a list of what the project manager should be monitoring weekly. This is not a complete list and may increase or decrease based on project or organizational requirements.
Metrics inform, and different metrics inform differently.
This will not be a treatise on metrics, but knowing what you need to know and selecting the appropriate metric or measurement is important. This includes how we sample or acquire the raw metric data to be turned into information. Bad data manipulated to provide actionable information will lead to poor outcomes just as quickly as no data. Besides what to collect and how to collect
Lead and lag indicators are two performance metrics or Key Performance Indicators (KPIs) used in various fields, including business, project management, and performance measurement. They help organizations assess their progress and make informed decisions.
Lead Indicators:
- Lead indicators are predictive or forward-looking metrics that are used to anticipate future performance or outcomes. They are often used to influence and drive desired results.
- These indicators are typically proactive, as they provide insights into activities and factors that can influence future performance.
- Lead indicators are actionable and can be used to adjust or change processes and strategies to achieve desired goals.
- Examples of lead indicators in business might include customer inquiries, sales pipeline activity, employee training hours, or product development milestones. These metrics can predict future sales, customer satisfaction, or product launch success.
Lag Indicators:
- Lag indicators are retrospective or historical metrics that measure past performance or outcomes. They are used to assess the results of actions or decisions taken in the past.
- These indicators are used for performance evaluation and reporting after the fact. They are less actionable than lead indicators but still crucial for assessing the overall success of an organization or project.
- Lag indicators are typically more relevant to external stakeholders, such as investors, customers, or regulatory bodies, as they show historical performance.
Examples of lag indicators in business might include quarterly revenue, annual profit margins, customer satisfaction scores, or project completion dates. These metrics reflect past performance and can be used to assess the success of strategies or initiatives already implemented.
When to start monitoring Project Health?
We start understanding the monitoring of the project when we begin the project. We will explore what matters to the project sponsor and stakeholders and predict the project's outcome as project work is undertaken. So, in our opinion, monitoring Project Health begins with the project kickoff.
The project manager should have a working knowledge of the project. This has been presented in other articles. The project manager will need to work with the team to identify the most important things to measure for this specific project, though the base of cost and schedule will often be a part of this monitoring.
Our experience is to monitor project health at a minimum weekly. In Construction, it is common to have a two-week look-ahead schedule for project meetings. To keep this flow, it is necessary to update the schedule weekly. This is a great time to update the Project Health Dashboard. Staying current helps when the Owner's Representative asks for an instant update.
Set up a Project Dashboard/Status Monitor
Human beings are visual creatures. Couple that with the fast pace of business, the project team needs to clearly articulate the project circumstances and the consequences in unambiguous terms. We want those in the position to make critical decisions for the project to make the best possible decision on behalf of the project. Create a visual dashboard that provides a snapshot of project progress.
- Visual dashboard benefits
- Grabs the audience's attention
- Makes complex information easier to understand (actionable)
- Increase retention of the information
List of areas to include in the Dashboard:
*The first 5 are recommended as a minimum.
Key Performance Indicators (KPIs)
What is important?
- A few organizations may have companywide KPIs for projects.
- Project KPIs connection to organization KPIs
- Project Manager's may have a list from previous similar projects.
How to collect that information?
- Assume one of the KPIs is to keep the city officials properly informed and up to date on activities that would impact noise levels and traffic. This KPI information could be tracked with written communication dates.
How to present?
- Following the assumption above, the communication dates could be a line item on the Dashboard, e.g., 3/23/23 Notified City Safety Department of increased traffic week of 3/30/23.
Scope Management
Change Control:
- Documented Change Management Process
New Changes, Approved Changes, Scope change costs, and time impacts:
- Impacts to approved Scope.
- Impacts on existing deliverables.
Budget Monitoring
Apply PMI Budget Variance formula (Earned Value Management equations)
Budget Changes:
- Impacts on the latest approved budget.
Schedule Monitoring
- Apply PMI Schedule Variance formula (Earned Value Management equations)
- Milestone Tracking and predicting
- Gates/Phases metrics
Risk Management
- List of Risks and Status – most likely to impact *negative & positive
- Risk metrics that portend imminent event
Action Items (performance – slow action item closing)
- Completed
- New
- What items and how many are late
Issues List
- New, Resolved, Open, Impact
- Rate of closure (what and how many are late)
Lessons Learned
- Lessons Learned as they happen; particular lessons that improve the execution of the project. Particularly those that are cost and schedule savings.
Entering data into the Dashboard can be handled in a couple of ways. Since the project manager is the one who gets all updates, they enter updates. The other option is to have the team members enter their updates as they occur.
This Dashboard could be an MS Excel spreadsheet with each area as a worksheet. Current data would be on the Cover or first worksheet. It can be a short slide show presentation when presenting to a project sponsor or project review board (Project Approval Committee).
The Dashboard could also be in SharePoint or any online PM platform.
Conclusion
Monitoring the health of a project is essential for the project manager and team. Setting up for monitoring the health starts with identifying what matters. This is critical to understand how the project is evolving. Understanding how the project evolves will be followed with actions to keep the project on track and report the actual status of the project.
We want to identify and catch any variances as they are happening or soon after. We have found that staying current on the project's health helps when a project manager is asked about the project unexpectedly by the sponsor or stakeholder. Understanding the project's health is essential to taking corrective actions and keeping the team and organization informed of the state of the effort.